PhosAgro PJSC: PhosAgro Reports Operating and Financial Results for FY 2022

PhosAgro Reports Operating and Financial Results for FY 2022

Moscow – PhosAgro (“PhosAgro” or “the Company”) (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, today announces its consolidated IFRS financial results for the fourth quarter (4Q) and 12 months (FY) of 2022.

FY 2022 highlights

In FY 2022, production of mineral fertilizers and other chemicals increased by 4.6% year-on-year to 11.1 million tonnes. This growth was driven by the efficient operation of new production facilities, launched as part of the Company’s comprehensive long-term development programme, as well as the expansion of PhosAgro’s product line.

Total fertilizer sales in FY 2022 increased by 6.4% year-on-year to more than 11 million tonnes, an all-time record for the Company. At the same time, sales of phosphate-based fertilizers (the Company’s main products) increased by 8.3% to 8.4 million tonnes. This growth was driven by an increase in production volumes and strong demand for fertilizers in Russian and global markets.

Revenue for FY 2022 increased by 35.4% year-on-year and amounted to RUB 569.5 billion (USD 8.3 billion). The increase in revenue was the result of an increase in sales of end products.

The revenue increase was also driven by higher average sales prices in world markets and a focus on sales of high-margin fertilizers, which are in high demand among farmers.

The Company’s adjusted EBITDA increased by 39% year-on-year in FY 2022, reaching RUB 266.9 billion (USD 3.9 billion). EBITDA margin for 2022 rose to 46.9%.

In FY 2022, the Company’s adjusted free cash flow reached RUB 141 billion (USD 2.1 billion), an increase of 81.1% year-on-year.

Net debt as of 31 December 2022 had increased to RUB 180.3 billion (USD 2.6 billion), while the net debt/EBITDA ratio had decreased to 0.68x as of the end of the year.

Financial and operating highlights

RUB/USD exchange rates: average FY 2022 rate: 68.5494; average FY 2021 rate: 73.6541; as of 31 December 2022: 70.3375; as of 31 December 2021: 74.2926.

* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.

** Adj. EBITDA is EBITDA as reported minus FX differences from operating activities.

*** Adj. net profit is net profit as reported minus FX gain or loss.

**** Free cash flow adjusted for the amount of cash and cash equivalents written off as a result of the loss of ownership of foreign companies.

The Company faced a large number of challenges last year. At the same time, the Company was able to improve its financial performance considerably even in this environment thanks to a high level of efficiency and investments in capacity upgrades, a balanced financial policy and favourable prices in global markets.

Increased fertilizer production and sales drove year-on-year revenue growth of more than 35%. At the same time, revenue grew faster than the cost of sales, which increased by about 23% during the year.

These trends enabled the Company to increase its adjusted EBITDA by 39% year-on-year, while adjusted net profit rose by 40%.

The 81% increase in adjusted free cash flow to more than RUB 141 billion was driven by higher sales margins as well as efficient working capital management.

The Company enjoys a high degree of financial stability thanks to its robust performance in 2022. As of 31 December 2022, the net debt/adjusted EBITDA ratio had declined to 0.68x.

Among major events in terms of debt management, it is worth noting that holders of the Company’s Eurobonds voted to amend the issue documentation. In the current environment, these changes enable us to continue reliably servicing our public debt to noteholders – both in Russia and beyond its borders.

Situation in mineral fertilizer markets in 4Q 2022

The situation in global mineral fertilizer markets in 4Q 2022 was marked by a low level of sales in key areas and downward price trends for the main types of fertilizers. The decline in prices for phosphate-based and potash fertilizers was driven by seasonal factors and a decrease in import demand (most significantly in Europe).

Prices for nitrogen-based fertilizers, including urea, declined due to the weakening of natural gas prices in Europe and an increase in the utilisation of domestic capacities for the production of ammonia and nitrogen-based fertilizers. The drop in import demand for urea in India in 4Q 2022 was driven by an increase in domestic production (including at new facilities) and was also one of the key factors in the overall decline in global prices for urea.

In 2022, the average price of urea was USD 573 per tonne (FOB Baltic), versus an average price of USD 475 per tonne (FOB Baltic) in 2021; the average price of MAP in 2022 was USD 849 per tonne (FOB Baltic), compared with an average price of USD 651 per tonne (FOB Baltic) in 2021. Prices for phosphate and potash feedstocks also remained high: the average price for potassium chloride in 2022 was USD 621 per tonne (FOB Baltic); the average price for phosphate feedstocks was USD 277 per tonne (FOB Morocco) (for feedstocks with P2O5 content of 31%–33%). The average price of sulphur in 2022 was USD 203 per tonne (FOB Baltic).

Market outlook

The market for nitrogen-based fertilizers in 1Q 2023 is marked by an excess of supply in the market due to high levels of carry-over stocks (in European countries as well as North and South America), which continues to have a negative impact on prices.

Phosphate-based fertilizer prices have now stabilised. Prices can expect support from an increase in seasonal activity in South America, and in Brazil in particular, as well as in the US domestic market following a significant reduction in imports in 2022.

About the Company

PhosAgro (www.phosagro.ru) is a vertically integrated Russian company and one of the world’s leading producers of mineral phosphorous fertilizers and of high-grade apatite concentrate grading 39% P2O5 and higher. PhosAgro’s fertilizers are highly effective, ensuring the improved quality of agricultural produce.

PhosAgro Group is the largest manufacturer of phosphate-based fertilisers in Europe (by total capacity of NAP/MAP/NP/NPK/NPS production), the largest producer of phosphite grading 39% P2O5 in the world and one of the leading global producers of ammonium and diammonium phosphate, one of Europe’s leading and the only producer in Russia of monocalcium phosphate feed, and the only producer in Russia of nepheline concentrate.

The company’s main products, including phosphite, 57 grades of fertilizer, phosphate feed, ammonium, and sodium tripolyphosphate, are used in 100 countries on all inhabited continents. Our priority markets, besides Russia and the CIS, are Latin America, Europe, and Asia.

The company's shares are listed on the Moscow Exchange and its Global Depositary Receipts (GDRs) are listed on the London Stock Exchange (MOEX and LSE ticker: PHOR).

More information about PhosAgro PJSC can be found on our site: www.phosagro.ru